discussion paper on gst

8/12/2019 Discussion Paper on GST

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Discussion Paper on GST The Bikini Effect!

NOVEMBER 12 2"B# Santosh $at%ar

T$E &uch'a%aite( (iscussion paper on GST fro& the E&po%ere( )o&&ittee of State

*inance Ministers re+ease( +ast Tues(a# %ith &uch fanfare %hich %as suppose( to ,i-ea sneak peek into the %or+( of GST a &a.or turnin, point in the fie+( of in(irect ta/

refor&s in 0n(ia %as a co&p+ete +et(o%n

0t ha( a++ the e/cite&ent of a &uch'a%aite( $in(i &o-ie %ith stea scenes fro& the+ea( actors ut %hat %as put on (isp+a# is -er# (isappointin, as it hi(es &ore than it %as

actua++# suppose( to re-ea+ $o%e-er %hat it has re-ea+e( pro-i(es enou,h fo((er for

specu+ation an( (iscussion on %hat is in store for the future of in(irect ta/es in 0n(ia an(

ho% co&p+e/ +ife %ou+( e for the stakeho+(ers after the actua+ intro(uction of GSTGi-en the a&ount of paper %ork in-o+-e( to a&en( the re+e-ant pro-isions of the

)onstitution an( the appropriate +e,is+ations re3uire( to e put in p+ace # the Par+ia&ent

an( the State 4e,is+atures an( a+so the enor&it# of the tasks cut out for ureaucrac# to

re-a&p the a(&inistrati-e &echanis& for an effecti-e pan'0n(ia ro++ out it is -er#(outfu+ if a++ this cou+( e achie-e( efore 5pri+ 1 21 ,i-en the fact that it took

se-era+ #ears an( a p+ethora of %orkin, ,roups to sort out -arious issues an( u+ti&ate+#co&e out %ith this Discussion Paper

0n -ie% if the Par+ia&ent an( the State 4e,is+atures (o not &eet the 5pri+ 1 21

(ea(+ine then %e can e/pect it to e intro(uce( fro& 5pri+ 1 211 a+on, %ith the &ucha%aite( Direct Ta/es )o(e sche(u+e( to eco&e +a% fro& 5pri+ 1 211 But %e can rest

assure( that GST is ,oin, to e a rea+it# an( it (oes not &atter if it is 21 or 211

0n this rief %rite up an atte&pt is &a(e to hi,h+i,ht the sa+ient features of the propose(

GST as re-ea+e( # the Discussion Paper an( so&e of the co&p+e/ities it has to ne,otiateefore it eco&es a rea+it#

Dua+ GST677 Dua+ GST to e +e-ie( # oth )entre an( the States on ,oo(s an( ser-ices %hich%i++ e acke( # re+e-ant a&en(&ents to the )onstitution for the purpose of ena+in,

the States to +e-# GST on ser-ices an( a+so a++o% )entre to ta/ the -a+ue a((ition (o%n

the (istriution chainOne %on(ers as to ho% )entre %i++ e a+e to ta/ this -a+ue a((ition %hen States %i++

a+so +e-# GST on this (istriution chain *or e, %hen ,oo(s e&er,e fro& a

&anufacturin, entit# it is su.ect to +e-# of oth )ENV5T an( V5T or )ST as the case

&a# e %hen it is so+( to the consu&er %ho is a %ho+esa+er or another &anufacturer %hofurther consu&es these ,oo(s an( ser-ices

8hen the ,oo(s &o-e throu,h the (istriution chain to reach the u+ti&ate consu&er ie

throu,h the (istriutor to the retai+ers an( u+ti&ate+# to the consu&er there is -a+uea((ition %hich is a+rea(# su.ect to +e-# of V5T at -arious +e-e+s in this (istriution

chain apart fro& other +e-ies +ike entr# ta/ octroi surchar,e cess etc an( %hich %i++ e

susu&e( # the propose( +e-# of GST # the StatesThen ho% can this -a+ue a((ition in the (istriution chain e inc+u(e( in the (o&ain of

)entre 8i++ it not a&ount to (ou+e ta/ation on the sa&e set of transaction # oth

)entre an( the States9 Ma# e the actua+ +e,is+ations an( the propose( a&en(&ents to the

)onstitution %i++ take care of these issues an( rin, &ore c+arit#


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Susu&in, of )entra+ an( State ta/es6

77 Susu&in, of )entra+ ta/es +ike e/cise (ut# :this %as a+rea(# rena&e( as ;)ENV5T TP 5ctser-ice ta/ a((itiona+ custo&s (ut# +e-ie( un(er section ?:1= of )usto&s Tariff 5ct

1"@A ie )VD in co&&on par+ance a((itiona+ custo&s (ut# +e-ie( un(er section ?:A= of

)usto&s Tariff 5ct 1"@A ie S5D in co&&on par+ance cesses an( surchar,es in theGST to e +e-ie( # the )entre %hich %i++ e ca++e( as )entra+ Goo(s an( Ser-ices Ta/

or )GST for short

77 Susu&in, of State'+e-e+ ta/es +ike V5TSa+es ta/ entertain&ent ta/ :other than those+e-ie( # +oca+ o(ies %h# shou+( this e +eft out= +u/ur# ta/ ta/es on +otter# ettin,

an( ,a&+in, cesses an( surchar,es +e-ie( # states in so far as the# re+ate to supp+# of

,oo(s an( ser-ices in the GST to e +e-ie( # the States %hich %i++ e ca++e( as State

Goo(s an( Ser-ices Ta/ or SGST for short )ST %i++ e co&p+ete+# phase( out %hich ison e/pecte( +ines

Both )GST an( SGST %i++ e a-ai+a+e for set off at the suse3uent +e-e+ of transaction

Set off6

77 The set off of )GST an( SGST are &utua++# e/c+usi-e The input cre(it accu&u+ate(fro& )GST sha++ not e uti+iCe( for (ischar,in, SGST an( -ice -ersa $o%e-er there is

a ne% &echanis& propose( to e put in p+ace for inter'state transactions in ,oo(s an(ser-ices %ith the intro(uction of the concept of 0GST %here )entre %i++ +e-# 0GST on the

inter'state transaction of ,oo(s an( ser-ices 0GST %i++ ha-e co&ponents of oth )GST

an( SGST coup+e( %ith appropriate pro-isions for consi,n&ent or stock transfer of,oo(s an( ser-ices :0 %on(er ho% the# %i++ stock transfer intan,i+es +ike ser-ices=

The propose( cre(it &echanis& in case of 0GST %i++ %ork as fo++o%s6

The inter'state se++er %i++ pa# 0GST on -a+ue a((ition after a(.ustin, a-ai+a+e cre(it of

0GST )GST an( SGST on the purchases The e/portin, state ie the state in %hich theinter'state se++er is +ocate( %i++ transfer to the )entre the cre(it of SGST use( in pa#&ent

of 0GST The (ea+er in the i&portin, state ie the u#er in the inter'state transaction %i++

c+ai& cre(it of 0GST for (ischar,in, his output ta/ +iai+it# in that state ie )GST SGSTan( 0GST %hich he &a# e +ia+e to pa# further The )entre %i++ transfer to the

i&portin, state the cre(it of 0GST use( in pa#&ent of SGST 0n fact )entre %i++ act as a

c+earin, house for this purpose for a++ the i&portin, statesGST on i&port of ,oo(s an( ser-ices6

77 4e-# of GST # oth )entre an( States on i&port of ,oo(s an( ser-ices into 0n(ia

an( a++o%in, this +e-# as set off The inci(ence of this +e-# %i++ fo++o% the (estination

princip+e an( the ta/ re-enue in case of SGST %i++ accrue to the State %here the i&porte(,oo(s an( ser-ices are consu&e( This +e-# %i++ a+so e acke( # necessar#

)onstitutiona+ a&en(&ents to ena+e the States to actua++# +e-# GST on i&port of ,oo(s

an( ser-ices8hi+e the E&po%ere( )o&&ittee has i(entifie( the ta/es an( +e-ies at oth the )entra+

an( State +e-e+ %hich shou+( e susu&e( into the ne% +e-ies the i(ea of i&posin, oth

)GST an( SGST on i&port of ,oo(s an( ser-ices # oth )entre an( States is intri,uin,since there is no proposa+ to (isan( the asic custo&s (ut# +e-ie( un(er section 12 of the

)usto&s 5ct 1"2

Moreo-er there is no proposa+ to susu&e asic custo&s (ut# as %e++ On+# )VD an(

S5D are consi(ere( for this purpose 0f the i(ea is to (o a%a# %ith +e-# of asic custo&s


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(ut# a+to,ether an( in turn i&pose )GST an( SGST separate+# on i&ports then it is

%e+co&e ecause it eco&es e+i,i+e for set off for the suse3uent entit# in the -a+ue a((

chain But i&posin, asic custo&s (ut# an( a+so )GSTSGST on i&ports of ,oo(s is nota -er# ,oo( i(ea as it %i++ ur(en the consu&ers :irrespecti-e of %hether he is an

in(i-i(ua+ or a &anufacturin, entit#= -er# a(+#

5+ternati-e+# asic custo&s (ut# &a# e rep+ace( a+to,ether %ith +e-# of )GST an(SGST # oth )entre an( States since asic custo&s (ut# is not a-ai+a+e for set off

thou,h it is an in(irect +e-# u+ti&ate+# passe( onto the consu&er %hereas )GST an(

SGST +e-ie( on i&ports %i++ e a-ai+a+e for set offGST Structure6

77 8hi+e the E&po%ere( )o&&ittee (eci(e( to a(opt a t%o rate structure a +o%er rate

for necessar# ite&s an( ,oo(s of asic i&portance an( a stan(ar( rate for ,oo(s in

,enera+ an( specia+ rate for precious &eta+s there is no c+ue as to %hat the rates %ou+( ean( %hether this structure %ou+( e unifor&+# a(opte( in )GST as %e++ as SGST

There is a proposa+ to a(opt the e/e&pte( ,oo(s +ist in the V5T (o&ain inc+u(in, ,oo(s

of +oca+ i&portance on an a++ 0n(ia asis inc+u(in, the )entra+ Go-ern&ent This is #et to

e reso+-e( an( fina+iCe( an( ,i-en the (i-ersit# in pro(uction of ,oo(s an( ser-ices inthis countr# it is to e seen if there %i++ e an# consensus on this issue But +et us hope

that there %i++ e a consensus an( a unifor& +ist is a(opte( for oth )GST an( SGST%hi+e keepin, the +ist to the arest &ini&u&

Thresho+( +i&it an( co&poun(in, sche&e6

77 The E&po%ere( )o&&ittee propose( a thresho+( of Rs1 +akh oth for ,oo(s an(ser-ices for SGST for a++ the states an( union territories %ith a(e3uate co&pensation for

certain states :particu+ar+# North'Eastern re,ion an( specia+ cate,or# states= %here a

+o%er thresho+( ha( pre-ai+e( in the V5T re,i&e

*urther to enefit s&a++ tra(ers an( s&a++ sca+e in(ustries an( to a-oi( (ua+ contro+ thethresho+( for )GST for ,oo(s is propose( to e at Rs1A crore %hi+e reco&&en(in, a

hi,her thresho+( for ser-ices un(er )GST 0f the thresho+( for ser-ices un(er SGST is

propose( to e Rs 1 +akhs then for the sake of unifor&it# a si&i+ar thresho+( +i&it&akes sense e-en for )GST There is no reason %h# there shou+( e a hi,her thresho+(

for ser-ices un(er )GST

77 0n a((ition to the propose( thresho+( +i&its the E&po%ere( )o&&ittee i&porte( theconcept of co&poun(in, sche&e pre-ai+in, in the V5T (o&ain into GST $o%e-er

stran,e+# its reco&&en(ation is on+# in the rea+& of SGST an( not )GST The

co&positionco&poun(in, sche&e for the purpose of GST %ou+( ha-e a unifor& upper

cei+in, on ,ross annua+ turno-er :Rs A +akhs= an( a f+oor ta/ rate :A= %ith respect to,ross annua+ turno-er across the states

The sche&e %ou+( a+so a++o% option for GST re,istration for (ea+ers %ith turno-er e+o%

the co&poun(in, cut'off $o%e-er it is not re-ea+e( if this ta/ pai( # the entitiesa-ai+in, co&position sche&e is e+i,i+e as set off for the u#ers

Stran,e+# there is no proposa+ fro& the E&po%ere( )o&&ittee for a(option of a si&i+ar

&echanis& un(er )GST for the sake of unifor&it# 0t &a# e note( that there is a+rea(# aco&poun(in, sche&e pre-ai+in, in ser-ice ta/ %hich is current+# +i&ite( to %orks

contract ser-ice 5+so there are se-era+ aate&ent sche&es for -arious ta/a+e ser-ices

%ith -arious per&utations an( co&inations


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Proa+# it %as presu&e( that since the thresho+( +i&it for ,oo(s un(er )GST is a+rea(#

set at a hi,h of Rs 1A crores there is no re3uire&ent for a separate co&poun(in,

sche&e for ,oo(s un(er )GST 0f that is so then +et there e a co&&on thresho+( +i&it ofsa# Rs A +akhs for ,oo(s un(er oth )GST an( SGST an( (o a%a# %ith co&position

sche&e a+to,ether as it %i++ on+# co&p+icate proce(ura+ re3uire&ents for a-ai+in, set off

Pro(ucts an( ta/es out of GST fo+(677 Since so&e states earn sustantia+ re-enues fro& purchase ta/ especia++# states %hich

pro(uce foo( ,rains this issue is #et to e reso+-e(

77 4oca+ +e-ies +ike octroi i&pose( # +oca+ o(ies on &o-e&ent of ,oo(s an( ser-icesare not in the +ist of ta/es %hich %i++ e susu&e( # GST an( %i++ continue to e/ist e-en

after intro(uction of GST

77 5+coho+ic e-era,es petro+eu& pro(ucts toacco pro(ucts :partia++#= %i++ continue to

e out of GST77 5rea ase( e/e&ptions are in .eopar(# as the E&po%ere( )o&&ittee proposes to

(iscontinue these e/e&ptions aate&ents reates etc Fnfortunate+# the specia+

in(ustria+ area sche&es operatin, in the V5T (o&ain is co&p+ete+# (ifferent fro& the area

ase( e/e&ptions pro-i(e( # the )entra+ Go-ern&ent0t %i++ e interestin, to see ho% this pans out %hen the actua+ +e,is+ations are put in p+ace

ecause the states %hich ha-e enefite( fro& this )entra+ sche&e %i++ ha-e to (o a ti,htrope %a+k to actua++# persua(e the )entre to e/ten( this e/e&ption enefit

Thus %hi+e the efforts put in p+ace # -arious %orkin, ,roups urnin, &i(ni,ht oi+ to

rin, aout +ife a+terin, chan,es in the fie+( of in(irect ta/ation in 0n(ia is +au(a+e there-e+ations throu,h the Discussion Paper is certain+# (isappointin, as it ,i-es scope for

&ore 3uestions than ans%ers 5fter #ears of pain stakin, e/ercise an( har( +aour # the

E&po%ere( )o&&ittee an( its -arious %orkin, ,roups the +east %e can e/pect is that

the chi+( %i++ not e a sti++ orn

First Discussion Paper on Goods and Services Tax Looking forward !!

NOV"# $$% &''(

") *eetes+ Veera , Sures+ Nair

T*Empowered Committee of State Finance

Ministers has submitted its First Discussion Paper on

Goods and Services Tax (GST) and the same hasbeen paced in pubic domain for comments! This

document has ta"en into account the report of the

#oint $or"in% Group on GST and the views receivedfrom the State and Centra Government on proposed

mode for GST ma"in% it the &curtain raiser' for theeventua ro out of GST! mon%st others the

Discussion Paper has aid emphasis on the need to have an appropriatemechanism on GST bindin% on both the Centre and the States! The importance

of a harmonius rate structure under GST with a%reed upon mandate onConstitutiona amendment aso finds mention in the Discussion paper!

*e+ features of proposed GST mode,


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-o.ponents of GST/

dua GST with defined functions for the Centre and States has been

recommended! -n other words both the Centre and the States woud haveconcurrent power to ev+ tax on %oods and services ie The dua GST woud have

two components, one evied b+ the Centre (CGST) and the other evied b+ theStates (SGST)! This is ine with the .ud%et announcement of /on0be Finance

Minister!

Taxes to 0e su0su.ed under GST/

Central levies to be subsumed under CGST

1 Centra Excise dut+

1 dditiona Excise duties

1 The Excise dut+ evied under the Medicina and Toietries Preparation ct

1 Service Tax

1 dditiona customs dut+ common+ "nown as Countervaiin% Dut+ (C2D)

1 Specia dditiona Dut+ of Customs3 45 (SD )

1 Surchar%es and

1 Cesses

State taxes to be subsumed under SGST

1 2T 6 Saes tax

1 Entertainment tax evied b+ States ( Entertainment tax evied b+ oca bodieshas been eft out )

1 7uxur+ tax

1 Taxes on otter+ bettin% and %ambin%

1 State Cesses and Surchar%es which reate to supp+ of %oods and services

1 Entr+ tax not in ieu of 8ctroi

The treatment to be adopted for Purchase tax is under discussion and a fina

view on the same is +et to emer%e! -t is desirabe to have consensus onsubsumin% Purchase tax as "eepin% such components of present 2T s+stem

out of GST coud impact the efficienc+ of the proposed GST mode! This is one of


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the open issues identified in the Discussion Paper!

cohoic bevera%es and Petroeum Products have been "ept out of the GST net

whereas Tobacco products woud be sub9ected to GST with -nput Tax Credit!Centre ma+ be aowed to ev+ excise dut+ on tobacco products over and above

GST without -nput Tax Credit!

1pp2ica0i2it) of GST /

CGST and SGCT woud be appicabe to a transactions of %oods and servicesmade for a consideration with the foowin% exemptions,

Exempted %oods and services

Goods which are outside the purview of GST

Transactions which are beow the prescribed threshod imit for GST

GST rate structure

:nder the proposed GST mode %oods woud have two rates both at Centre andState ; 7ower rate for necessar+ items and a standard rate for %oods in %enera!

specia rate has been envisa%ed for precious metas with a ist of exempted%oods under CGST and SGST (efforts are on to have a simiar exempted ist of

%oods)! Services woud have a sin%e rate at CGST and SGST eve! TheDiscussion paper does not refer or comment on the uires concerted effort from the Centre and the Empowered Committee asmutipe state e%isations coud ma"e the proposed GST mode no different from

the present 2T set up! Comprehendin% the issues that coud arise out ofmutipe state e%isations ( as experienced durin% the phased impementation of

2T ) the discussion paper specifica+ mentions that the basic features of awsuch as char%eabiit+ definition of taxabe event and taxabe person measure of

ev+ vauation provisions basis of cassification etc woud be uniform across the

state statutes as far as practicabe !

1d.inistration of GST

The administration of CGST woud be vested with the Centre and that for SGST

woud be with the respective States! The Centre and the States woud haveconcurrent 9urisdiction for the entire vaue chain and for a taxpa+ers on the

basis of prescribed threshod for %oods and services! Functions such asassessment scrutin+ audit and enforcement woud be underta"en b+ the


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authorit+ coectin% the respective taxes!

T+res+o2d for GST

uniform threshod for SGST of


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credited)!

Tax pa)er 4dentification Nu.0er

$ith view to inte%rate the P= based -ncome tax number and faciitate dataexchan%e and tax pa+er compiance each tax pa+er woud be aotted a P=

based taxpa+er identification number with a tota of ?6?A di%its!

Periodica2 returns


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Cenvat Credit 6 2T credit whie transitionin% into the proposed GST mode etc!

Ma+ be there wi be more on these aspects in the da+s to come!

5T+e aut+ors are senior indirect tax professiona2s in rnst , 6oung Ltd7T+e views expressed are persona28

-2ick to Print -2ick to -2ose

First GST Discussion Paper 9 1 Da.p S:ui0;

NOV"# $$% &''(

") S Sivaku.ar% -1

T*much awaited First GST Discussion Paper is out and is ar%e+ on expectedines! 8ne is however disappointed to see that the Paper does not contain an+

specific proposas which woud have made it more reevant for the -ndustr+!

7et0s ta"e a >uic" oo" at some of the saient points covered in the DiscussionPaper!

?! The Paper does not %ive an+ indication about the GST rates the mostimportant issue under the GST! The east it coud have attempted is to specif+

the revenue neutra rate! -n a h+pothetica exampe0 %iven in the Paper there is

a mention of ?@5 CGST and ?@5 SGST! - don0t "now if this is an indication ofthe i"e+ hi%h tax rates under the GST re%ime! $e wi "eep our fin%ers crossed

for the present!

! The Paper ta"s of the Centra Excise dditiona Centra Excise Service tax

C2D Specia dditiona Customs Dut+ (SD) Surchar%es and Cesses to besubsumed within the CGST whie 2T6Saes tax Entertainment Tax 7uxur+ Tax

Taxes on otter+ bettin% and %ambin% states cesses and surchar%es in so far asthe+ reate to supp+ of %oods and services and entr+ tax in ieu of octroi! -t now

oo"s certain that stamp dut+ woud be outside of GST and so woud octroi andentr+ tax! This is bad news for the


10/19

consumed! Fu and compete set;off wi be avaiabe on the GST paid on import

on %oods and services! -ssues coud crop up in terms of compex transactionsinvovin% et0s sa+ a t+pica transaction invovin% import at the Chennai Port

imported %oods passin% thro0 ndhra Pradesh and reachin% et0s sa+ .an%aorethe destination! -t coud be hard to enthuse the %u+s in Tami =adu to faciitate

an import transaction for which *arnata"a woud %et the tax revenue! 8nehopes that a set off mechanism %ets introduced to %et over issues of this "ind!

A! -n terms of the threshod imits the Papers indicates that the threshod for

CGST for %oods ma+ be "ept at


11/19

third state etc!

J! -t is disappointin% to see that the Paper ma"es no mention on how the carried

forward 6 unutiiBed credit both under the centra aws as we as under the 2Taws woud %et treated under GST! -n the absence of an+ mention of the intent to

restrict the carried forward input tax credit one hopes that the Governmentwoud aow for this unutiiBed credit to be carried forward under the GST re%ime

without an+ restrictions!

?@! -n terms of the endeavour to have common rues and procedures to be

foowed in respect of both the CGST and the SGST the Paper ma"es a %enericstatement that such uniform procedure woud be prescribed to the extent

feasibe! The Paper does not even sa+ that there woud be common returns!There is no %uarantee that we woud have a near common e%isation appicabe

to both CGST and the SGST! This coud be bad news for the -ndustr+ as oneshoud expect the ni%htmares of handin% the State


12/19

11 8ne cannot but wonder as to wh+ the Government has not made use of the

opportunit+ and incuded specific proposas in the Discussion Paper which coudhave set the ba roin% for the GST impementation from pri ? @?@! -s the

First GST Discussion Paper then a damp s>uibK

5T+e 1ut+or is Director% S< So2utions Pvt Ltd% "anga2ore8


First Discussion Paper 0rings c2arit) on .an) issues!

NOV"# $$% &''(

") Prita. a+ure% -1

F4N1LL6%it0s out! The First Discussion Paper on GST in -ndia 0 (herein after

referred as Paper0 ) was reeased b+ the Empowered Committee ed b+ sim

Das%upta on ?@!??!@@J! The paper is a starter for the approachin% GSTre%ime! -t 9ust sets roin% the discussion on the comin% GST so the ministr+ canreceive views from the industr+ and customer!

The paper deivers carit+ on man+ aspects of proposed Goods and Service Tax

(GST)! -n the foowin% paras - have made an attempt to summarise what the

Paper 0 sa+s and what it doesn0t!

11 Dua2 structure/s expected -ndia is impementin% dua GST 0 ! Centre

Government woud be ev+in% Centra GST (CGST) and State Governments woudbe ev+in% State GST (SGST)! CGST and SGST woud be appicabe on a22 t+e

transactions of goods and services .ade for a consideration except,

11 Exempted %oods and services which are outside the purview of GST and

11 Transactions which are beow the prescribed threshod imits!

11 Statutes/This dua GST mode woud be impemented throu%h .u2tip2e

statutes 5one for -GST and SGST statute for ever) State87 /owever anassurance is %iven in the paper that the basic features of aw such as

char%eabiit+ definition of taxabe event and taxabe person measure of ev+incudin% vauation provisions basis of cassification etc! woud be uniform across

these statutes as far as practicabe!

11 Date of introduction of GST/=o date for introduction of the GST is

proposed in the Paper! The deadine for its impementation i!e! @?!@4!@?@ isi"e+ to be missed!

1 #ate of GST/


13/19

1 =ecessities, 7ower


14/19

to e%itimate expir+ time both for the Centre and the States!

1 Taxes to be subsumed, -n CGST the taxes to be subsumed are Centra Excise

Dut+ dditiona Excise Duties Service Tax dditiona Customs Dut+ common+"nown as Countervaiin% Dut+ (C2D) Specia dditiona Dut+ of Customs ; 45

(SD) Excise Dut+ evied under the Medicina and Toietries Preparation ctSurchar%es and cesses!

$hereas SGST wi subsume 2T6Saes tax Entertainment tax (uness it is eviedb+ the oca bodies) 7uxur+ Tax Taxes on otter+ bettin% and %ambin% State

Cesses and Surchar%es in so far as the+ reate to supp+ of %oods and servicesEntr+ tax not in ieu of 8ctroi!

1 Products outside GST re%ime, -tems containin% coho and petroeumproducts wi be outside the GST re%ime! /owever in respect of Purchase Tax 0

no decision is made whether it shoud be part if GST re%ime or outside it!

1 Compiances and procedures, The assessees woud be aotted P= basedre%istration numbers and woud be re>uired to fie periodic returns for SGST LCGST! so appropriate accountin% codes wi be prescribed for Centra GST and

State GST separate+!

1 dministration, dministration of CGST and SGST woud be parae meanin%

SGST wi be administered b+ State Government and CGST b+ CentraGovernment! -n view of the introduction of GST -T -nfrastructure wi be

improved! Further re>uisite Constitutiona amendments wi aso be carried out!-t is mentioned that specific provisions woud aso be made to the issues of

dispute resoution and advance ruin%!

-t is apparent that now paper %ives carit+ on man+ fronts thou%h carit+ stieudes on the taxabe event in GST rate carr+ forward of cenvat credit etc!/owever these thin%s too wi achieve certaint+ in due course!


T+is edition of DDT is a22 a0out GST and toda)=s DDT 0ears a nice nu.0er $ & < >7

T4OL9DDT $&$$7$$7&''(

?ednesda)

GST is not si.p2) V1T p2us service tax 9 First Discussion paper 4t=s a22

win9win;

@GST is not si.p2) V1T p2us service tax but an improvement over the

previous s+stem of 2T and dis9ointed service tax! /owever for this GST to beintroduced at the State eve it is essentia that the States shoud be %iven the

power of ev+ of taxation of a services! This power of ev+ of service taxes hasso on% been on+ with the Centre!' sa+s the First Discussion Paper On

Goods and Services Tax 4n 4ndia% reeased +esterda+!
http://print%28%29/http://window.close%28%29/http://print%28%29/http://window.close%28%29/


15/19

Constitutiona mendment wi be made for %ivin% this power aso to the

States! Moreover with the introduction of GST burden of Centra Saes Tax(CST) wi aso be removed! The GST at the State;eve is therefore 9ustified for

(a) additiona power of ev+ of taxation of services for the States

(b) s+stem of comprehensive set;off reief incudin% set;off for cascadin% burdenof CE=2T and service taxes

(c) subsumin% of severa taxes in the GST and

(d) remova of burden of CST! .ecause of the remova of cascadin% effect the

burden of tax under GST on %oods wi in %enera fa!

The GST at the Centra and at the State eve wi thus %ive more reief to

industr+ trade a%ricuture and consumers throu%h a more comprehensive andwider covera%e of input tax set;off and service tax setoff subsumin% of severa

taxes in the GST and phasin% out of CST! $ith the GST bein% proper+formuated b+ appropriate caibration of rates and ade>uate compensation where

necessar+ there ma+ aso be revenue6resource %ain for both the Centre and theStates primari+ throu%h widenin% of tax base and possibiit+ of a si%nificant

improvement in tax;compiance! -n other words the GST ma+ usher in thepossibiit+ of a coective %ain for industr+ trade a%ricuture and common

consumers as we as for the Centra Government and the State Governments!The GST ma+ indeed ead to the possibiit+ of coective+ positive;sum %ame!

-GST% SGST and 4GST 9 t+e future 2anguage of taxation

$hie the Discussion paper on GST repeated+ emphasised that it is aimed at

removin% the cascadin% effect that sti exists after the CE=2T62T re%ime itconvenient+ did not hi%hi%ht the expansion of the centra tax to postmanufacturin% activities the burden of which cannot be insi%nificant! t present

Centra Excise dut+ is evied on+ on manufacture of %oods but not onsubse>uent tradin%! -n the GST era there wi be CGST ti the retaier and a the

deaer vaue additions are brou%ht in the tax net!

4GST *ow wi22 0e 4nter9State Transactions of Goods and Services 0etaxed under GST in ter.s of 4GST .et+odK n iustration,

The scope of -GST Mode is that Centre woud ev+ -GST which woud be CGSTpus SGST on a inter;State transactions of taxabe %oods and services! The

inter;State seer wi pa+ -GST on vaue addition after ad9ustin% avaiabe creditof -GST CGST and SGST on his purchases! The Exportin% State wi transfer to

the Centre the credit of SGST used in pa+ment of -GST! The -mportin% deaer wicaim credit of -GST whie dischar%in% his output tax iabiit+ in his own State!

The Centre wi transfer to the importin% State the credit of -GST used inpa+ment of SGST!

-ustration,


16/19

Sa+ CGST is 3 ?@5 and SGST 3 ?@5

-GST is ?@1?@ @5

7et us sa+ the vaue of %oods exported from one state to the other is


17/19

Para $7A Su0se:uent2)% after -onstitutiona2 1.end.ent e.powering

t+e -entre to 2ev) taxes on services% t+ese service taxes were a2soadded to -NV1T in &''>9'B7

Was the levy unconstitutional prior to this amendment?

GST -ertain Not fro. $7>7&'$'

-f there is an+thin% certain about GST it is that it cannot be impemented from

?!4!@?@!

ddressin% the meetin% of the Empowered Committee of State Finance Ministers

:nion Finance Minister Pranab Mu"her9ee said

The proposed Goods and Services Tax (GST) can deiver on a these promises

on+ if it has the foowin% essentia features,

(i) -t is comprehensive in scope and appies to as ar%e a ran%e of %oods and

services as possibe b+ minimiBin% the number of exemptions to a sma ist ofessentia items which impact the common man! To the extent possibe the

exemption ists of the States and the Centra Government are in ai%nmentO

(ii) The rates of tax of CGST and SGST ta"en to%ether are moderateO

(iii) The rates of tax of SGST and exemptions from SGST are uniform throu%houtthe countr+ so that a %iven set of %oods and services invites the same tax

treatment in ever+ StateO

(iv) The input credit chain is seamess coverin% the entire vaue chain from

manufacturin% to retai without brea"s re%ardess of whether %oods or servicesare suppied within a State or across State boundariesO

(v) s far as possibe ever+ transaction in the tax net bears both CGST andSGSTO

(vi) The tax treatment of %oods and services is simiarO

(vii) The Centra and State evies are fu+ neutraiBed in the case of exports (out

of -ndia)O and

(viii) The procedures are simpe and harmoniBed between the Centre and the

States!

/e had the ast au%h when he said

&8n our part - assure +ou that the recommendations and su%%estions made inthe Discussion Paper woud receive our in;depth and meticuous attention so that

we are abe to 9oint+ finaiBe the structure and desi%n of GST at the eariest!'


18/19

So what was reeased +esterda+ was on+ the States0 proposa

and the Centre wi come out with its proposas soon!

"efore $7>7&'$'% is it possi02e to

(i) Get the constitution amendedK

(ii) Get the aw reatin% to Centra GST passed b+ PariamentK

(iii) Get the aws reatin% to State GST passed b+ a State e%isaturesK Do the+

have a mode e%isationK

(iv) Get the computers read+ to capture and mana%e dataK re a the States -Tread+K

$e have 9ust four and a haf months to do a these and even assumin% that b+ a

mirace we are abe to do a the above what if the scheme is sta+ed b+ a /i%hCourtK

The Direct Taxes Code which is proposed to ta"e off in @?? is aread+ in thepubic domain and the


19/19

ar%e scae manufacturer too" the matter to the Commissioner (ppeas) who

too too" a simiar view exceptin% that he reduced the penat+ to uaitative test for and is concerned! 8nce an+ oneof these two tests are satisfied nothin% further needs to seen so far as the

nature of and is concerned!

-usto.s

Depart.ent 2oses #s7 (7& crores of custo.s dut) and .aEor pena2tiesdue to +a2f 0aked investigation and poor2) drafted s+ow cause notice

-ST1T sets aside -o..issioner=s order confir.ing dut) de.and andi.position of pena2ties

T*# were innumerabe instances where

discussion paper on gst

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